Govt talks tough on housing but ?is it firing blanks as Labour says?

The Government has made its predicted move to try to rein in surging house prices in Auckland and increasingly other cities such as Hamilton, Tauranga and Wellington, but the question remains — will it be effective?

It released a new national policy on urban development capacity yesterday, with a grim-faced Minister of Housing Nick Smith fronting the cameras to say the Government meant business.

The policy will force councils in growing urban areas to ensure there is a good land supply for new housing and businesses, in line with projected growth.

Smith added a stick with his warning that the Government had the power to legislate if councils did not comply, although he also said the Government was working with Auckland which is preparing a unitary plan.

The Government also confirmed it is now talking with the Reserve Bank about a new restriction on house-buying tied to the buyer’s income.

Elsewhere John Key was creating controversy and somewhat clouding the issue with a statement that there were houses available on TradeMe for less than $500,000. He continued to hold that stance this morning despite television clips last night that showed some of these properties, such as a one-room house on a small section, were far from desirable. Key was probably closer to the mark when he said that young couples may have to start their home ownership with apartments as happens elsewhere throughout the Western world.

That is not going to sit well with the sort of young couples regularly reported by the media, both employed in good-paying jobs, who are unable to get into the housing market.

There was more unpleasant, but probably wise, advice for them from Minister of Finance Bill English who said that with house prices possibly at a peak and interest rates historically low, couples might be better to wait before committing to a mortgage.

The whole housing situation is a godsend to the Opposition parties, particularly Labour which was quick to say the Government was “firing blanks”.